Tuesday, November 24, 2009

Tuesday Morning

US stocks opened slightly negative, down about a fifth of a percent or 17DJIA points. Third quarter GDP was revised down to 2.8% growth from 3.5%, on lower consumer spending. Dow component Hewlett Packard reported an in-line quarter last night, with in-line forward guidance. The share are off a little less than a percent in early trading.

Wow compared to the USA, their rates are brutal. Russia's central bank cut interest rates...to 9%!
Russia’s central bank cut its key interest rates to a record low in the ninth reduction since April as it seeks to deter speculative bets on the ruble and ease credit flows to households and businesses. Bank Rossii cut the refinancing rate to 9 percent from 9.5 percent and reduced the repurchase rate charged on central bank loans to 8 percent from 8.5 percent, effective from Nov. 25. It last lowered them by half a percentage point on Oct. 30.

Not uncommon these days, Wells Fargo took back the deed to the 3,000 acre Frederica community in Georgia.
Frederica was intended to be a “Pebble Beach of the East,” said Peter Capone, an architect who was Sea Island’s chief designer. Lot sales at Frederica, which reached more than $2 million a parcel in 2005 and 2006, were supposed to help finance the rest of Sea Island’s expansion, Capone said in an interview in October.

The drama continues for NYC's Stuyvesant Towers. An example of what NOT to expect to pull off in real estate - massive rent increases in a populist city.
The owners of Manhattan's Stuyvesant Town-Peter Cooper Village apartment complex are running out of money so fast they may default on their mortgage within the next few weeks. Tishman Speyer Properties, the real estate developer that owns the historic 80-acre property with asset manager BlackRock, has just $6.75 million left in reserves for StuyTown, according to credit rating agency RealPoint. That isn't enough even to cover December's costs, which include more than 6 percent interest on a $3 billion loan.

In all this drama, the only guaranteed winners are the fee-hungry investment banks. Cadbury, in a defensive move, could turn the tables on potential acquirer Kraft by offering to buy Kraft's confectionery business.
In merger parlance, it is called the Pac-Man defense, as the prey suddenly becomes the predator.
Cadbury has a secret defense against Kraft if no white knight comes along to save it from a too-low takeover bid by the food giant. The British chocolate maker is considering turning around and making a bid for Kraft's smaller confectionery business. Cadbury could afford the acquisition, and it makes strategic sense, said a source with knowledge of Cadbury's thinking. "If I were advising Cadbury, I'd say let's bid for Kraft's confectionery business," said a consumer banker.

With a rather highly-publicised 2009 Hoilday price war, the battle between Wal-Mart and Amazon.com is a fight for the future of retailing.
“It’s not about the prices of books and movies anymore. There is a bigger battle being fought,” said Fiona Dias, executive vice president at GSI Commerce, which manages the Web sites of large retailers. “The price-sniping by Wal-Mart is part of a greater strategic plan. They are just not going to cede their business to Amazon.”

(Wal-Mart, Amazon, Stuyvesant, Tishman-Speyer, retail, Wells Fargo, Frederica, interest rates, Russia, GDP, Hewlett Packard)

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